Category: State Policy

Meg WieheDeputy Director

December 5, 2018

State lawmakers are preparing their agendas for 2019 and looking at all sorts of tax and budget policies in the process, raising many familiar questions. Oregon legislators, for example, will try to fill in the blanks in a proposal to boost investments in education that left out detail on how to fund them, while their counterparts in Texas face the inverse problem of a proposed property tax cut that fails to clarify how schools could be protected from cuts. Similar school finance debates will play out in many other states. Alabama, Kansas, and Louisiana will look at gas tax updates, as Indiana and Mississippi will consider tobacco tax increases, and nearly every state has decisions to make about how to implement online sales taxes and what to do with the revenue.

December 4, 2018

Affordable housing advocates across the nation are attempting to address the problem at the local level, but they often face political and community opposition. These challenges are currently playing out in Baltimore, which is turning into a case study in how the best-planned civic interventions run into tough road blocks when it comes to tax increases versus moneyed special interest who seek to block those tax increases.

Meg WieheDeputy Director

November 16, 2018

State policymakers, voters, and observers have been reflecting on this year’s campaigns and looking ahead to how the policy opportunities in their states have shifted as a result. For example, Arkansas’s governor sees a fresh chance to slash income taxes on the state’s wealthiest residents, while the governor-elect of Illinois will be doing just the opposite, launching into a promised effort to shore up the state’s budget by asking the wealthy to pay more. New York and Virginia residents may end up with buyers’ remorse after Amazon accepted their combined $2 billion tax subsidy offers for its HQ2 project. And even more states are considering legalizing medical and recreational cannabis as the early-adopting states continue to see handsome revenue returns.

Carl DavisResearch Director

November 13, 2018

Today Amazon announced major expansions in New York and Virginia, where it intends to hire up to 50,000 full-time employees. The announcement marks the culmination of a highly publicized search that lasted more than a year and involved aggressive courting of the company by cities across the nation. The following are three tax-related observations on the announcement.

Meg WieheDeputy Director

November 8, 2018

Tuesday’s elections shook up statehouses, governors’ offices, and tax laws in many states, and in this week’s Rundown we bring you the top 3 election state tax policy stories to emerge. First, voters in Kansas and other states sent a message that regressive tax cuts and supply-side economics have not succeeded and are not welcome among their state fiscal policies. Meanwhile, residents of many other states, including most notably Illinois, voted for representatives who reflect their preference for equitable, sustainable policies to improve their state economies through smart public investments and improve the lives of all residents through progressive tax structures. Lastly, while some states missed opportunities in this election to make similar improvements, such as new limitations on taxes in Arizona, Florida, and North Carolina, this week’s elections sent a broad message that voters care about sound fiscal policy in their states.

Meg WieheDeputy Director

October 31, 2018

Look out for potholes if you’re out trick-or-treating in Alabama tonight, where crumbling infrastructure figures to be a dominant debate in the coming legislative session. And be prepared to share the streets with disgruntled teachers if you‘re in Louisiana, where teachers are walking out to protest regressive tax policies that are sucking the lifeblood from the state’s schools. Meanwhile, Wisconsin residents are sharing scary stories of grotesquely large business tax subsidies and the “dark store” tax loophole they’ll be voting on next week. And you better expect the unexpected if you’re in Delaware, where Gov. John Carney shocked everyone by vetoing two broadly supported tax bills last week.

Meg WieheDeputy Director

October 25, 2018

In this special edition of the Rundown we bring you a voters’ guide to help make sense of tax-related ballot questions that will go before voters in many states in November. Interests in Arizona, Florida, North Carolina, Oregon, and Washington state have placed process-related questions on those states’ ballots in attempts to make it even harder to raise revenue or improve progressivity of their state and/or local tax codes. In response to underfunded schools and teacher strikes around the nation, Colorado voters will have a chance to raise revenue for their schools and improve their upside-down tax system at the same time by enacting a graduated income tax, though similar efforts in Arizona, Hawaii, and Massachusetts were litigated off of those states’ ballots by opponents. Several states will decide on revenue increases for other specific purposes, such as tobacco, alcohol, and gasoline taxes for services like health care, law enforcement, and roads. And there’s even a carbon tax going to voters in Washington state.

Meg WieheDeputy Director

October 18, 2018

Policymakers and residents in all 50 states and the District of Columbia got new ITEP data this week on how their tax structures and decisions affect their high-, middle-, and low-income residents. As our “Who Pays?” report outlines, most state and local tax codes exacerbate economic inequalities and all states have room to improve. The data can serve as an important informative backdrop to all state and local tax policy debates, such as whether to change the valuation of commercial property in California, how to improve funding for early childhood education in Indiana, and how to evaluate tax-related ballot measures around the nation.

Aidan DavisSenior Policy Analyst

October 17, 2018

State and local tax systems in 45 states worsen income inequality by making incomes more unequal after taxes. The worst among these are identified in ITEP’s Terrible 10. Washington, Texas, Florida, South Dakota, Nevada, Tennessee, Pennsylvania, Illinois, Oklahoma, and Wyoming hold the dubious honor of having the most regressive state and local tax systems in the nation. These states ask far more of their lower- and middle-income residents than of their wealthiest taxpayers.

Carl DavisResearch Director

October 17, 2018

A new ITEP analysis reveals that many states traditionally considered to be “low-tax states” are actually high-tax for their poorest residents. The “low tax” label is typically assigned to states that either lack a personal income tax or that collect a comparatively low amount of tax revenue overall. But a focus on these measures can cause lawmakers to overlook the fact that state tax systems impact different taxpayers in very different ways, and that low-income taxpayers often do not experience these states as being even remotely “low tax.”

Meg WieheDeputy Director

October 12, 2018

Voters all around the country are educating themselves for the upcoming elections, notably this week around ballot initiatives in Arizona and Colorado and competing gubernatorial tax proposals in Georgia and Illinois. But not all eyes are on the elections, as the relationship between state and local policy made news in Delaware, Idaho, North Dakota, and Ohio.

Meg WieheDeputy Director

October 4, 2018

South Carolina lawmakers have finally passed a federal conformity bill in response to last year’s federal tax-cut legislation. Voters in many states are hearing a lot about tax-related questions they’ll see on the ballot in November, particularly residents of Florida, Montana, and Oregon, where corporate donors and other anti-tax interests are spending major sums to alter policy in their states. And states continue to work on ensuring they can collect online sales taxes and, in some states, online sports betting taxes.

Carl DavisResearch Director

October 2, 2018

A proposed IRS regulation would eliminate a tax shelter for private school donors in twelve states by making a commonsense improvement to the federal tax deduction for charitable gifts. For years, some affluent taxpayers who donate to private K-12 school voucher programs have managed to turn a profit by claiming state tax credits and federal tax deductions that, taken together, are worth more than the amount donated. This practice could soon come to an end under the IRS’s broader goal of ending misuse of the charitable deduction by people seeking to dodge the federal SALT deduction cap.

Meg WieheDeputy Director

September 26, 2018

Affordable housing efforts made news in Minnesota and Virginia this week, as tax breaks for homeowners and other victims of Hurricane Florence were made available in multiple states. Meanwhile, New Jersey is still looking into legalizing and taxing cannabis, and Wyoming continues to consider a corporate income tax. And gubernatorial candidates and ballot initiative efforts will give voters in many states much to consider in the November elections.

Carl DavisResearch Director

September 25, 2018

The federal gas tax was last raised on Oct. 1, 1993, the same year that the classic movie Groundhog Day was unveiled to the American public. In the film, Phil Connors (played by Bill Murray) gets caught in a time loop and spends decades reliving the same cold, February day in Punxsutawney, Penn. Those of us lamenting the 25-year stagnation of the federal gas tax can’t help but feel some of that same sense of repetition. Federal lawmakers occasionally discuss updating the gas tax, but top lawmakers have yet to put in the effort needed to shepherd such a change into law. In fact, after passage of a top-heavy income and estate tax cut last year, the chances of boosting the federal gas tax anytime soon are probably slimmer than ever.

Misha HillPolicy Analyst

September 20, 2018

The national poverty rate declined by 0.4 percentage points to 12.3 percent in 2017. According to the U.S. Census, this was not a statistically significant change from the previous year. 39.7 million Americans, including 12.8 million children, lived in poverty in 2017. Median household income also increased for the third consecutive year, but this was […]

Carl DavisResearch Director

September 20, 2018

A recent IRS clarification, which appears to have been a pet project of Sen. Pat Toomey (R-PA), has been widely interpreted as reopening a loophole the agency had proposed closing just weeks earlier. But while the announcement creates an opening for aggressive tax avoidance in many states, Pennsylvania, ironically enough, isn’t one of them.

Meg WieheDeputy Director

September 19, 2018

The Rundown is back after a few-week hiatus, with lots of state fiscal news and quality research to share! Maine lawmakers found agreement on a response to the federal tax-cut bill, states continue to sort out how they’ll collect online sales taxes in the wake of the Wayfair decision, and policymakers in several states have been working on summer tax studies and other preparations for 2019 legislative sessions. Meanwhile, work on ballot measures and candidate tax plans to go before voters in November has been even more active, particularly in Arizona, California, Florida, Hawaii, and Missouri. Our “What We’re Reading” section has lots of great research and reading on inequalities, cities turning to regressive fees, states’ preparations for the next recession, and much more. And we at ITEP have been hard at work during this Rundown hiatus as well, updating our most key resources on the upside-down nature of state and local taxes and how states can work to improve them; we’re saving some of the best for later, but see below for an update on some what we’ve been working on.

Carl DavisResearch Director

August 28, 2018

After states implemented laws that allow taxpayers to circumvent the new $10,000 cap on deductions for state and local taxes (SALT), the IRS has proposed regulations to address this practice. It’s a safe bet the IRS will try to crack down on the newest policies that provide tax credits for donations to public education and other public services, but it remains to be seen whether new regulations will put an end to a longer-running practice of exploiting tax loopholes in some states that allow public money to be funneled to private schools.

Meg WieheDeputy Director

August 22, 2018

Arizona voters learned this week that they will have an opportunity this fall to restore school funding through a progressive tax measure. The effects of the Supreme Court’s Wayfair decision could soon be seen on Michigan and Mississippi roads, as leaders in both states have proposed devoting new online sales tax revenues to infrastructure needs. And new research highlighted in our “What We’re Reading” section discredits one-size-fits-all prescriptions for state economic growth such as supply-side tax-cut orthodoxy, advocating instead for more nuanced and state-specific policymaking.

Meg WieheDeputy Director

August 16, 2018

Even as the haze from western wildfires reduced visibility across the nation this week, voters got more clarity on what to expect to see on their ballots this fall, particularly in California (commercial property taxes and corporate surcharges), Colorado (income taxes for education), Missouri (gas tax update), and North Dakota (recreational cannabis). Meanwhile, although Virginia lawmakers won’t return until 2019, they got a preview of a clear-headed federal conformity plan they should strongly consider. And look to our “What We’re Reading“ section for further enlightenment from researchers on the [in]effectiveness of charitable contribution credits, the [lack of] wage growth for America’s workers, and what [a few] states are doing to prepare for the inevitable next recession.

Meg WieheDeputy Director

August 8, 2018

August is often a season for states to define the parameters of tax debates to come, and that is true this week in several states: a tax task force in Arkansas is nearing its final recommendations; residents of Missouri, Montana, and North Carolina await results of court challenges that will decide whether tax measures will show up on their ballots this fall; and Michigan and South Dakota are taking different approaches to making sure they’re ready to collect online sales taxes next year.

August 7, 2018

Consumers’ growing interest in online shopping and “gig economy” services like Uber and Airbnb has forced states and localities to revisit their sales taxes, for instance. Meanwhile new evidence on the dangers and causes of obesity has led to rising interest in soda taxes, but the soda industry is fighting back. Carbon taxes are being discussed as a tool for combatting climate change. And changing attitudes toward cannabis use have spurred some states to move away from outright prohibition in favor of legalization, regulation and taxation.

Meg WieheDeputy Director

August 1, 2018

Although most state legislatures are out of session during the summer, the pursuit of better fiscal policy has no "off-season." Here at ITEP, we've been revamping the State Rundown to bring you your favorite summary of state budget and tax news in the new-and-improved format you see here. Meanwhile, leaders in Massachusetts and New Jersey have been hard at work in recent weeks and are already looking ahead their next round of budget and tax debates. Lawmakers in many states are using their summer break to prepare for next year's discussions over how to implement online sales tax legislation. And ballot initiative campaigns are active as well, including in Arizona, Colorado, and Montana.

Aidan DavisSenior Policy Analyst

July 24, 2018

States’ need for revenue and increased investment in key public services is not unique to this legislative session. But the extent of disinvestment—particularly in education—has been a driving force behind policy discussion and state legislative action this year. In many cases ill-advised tax cuts coupled with persistent school funding cuts led states to this common fate, initiating a powerful and growing trend. Here’s how lawmakers in a handful of state responded:

Meg WieheDeputy Director

July 19, 2018

In the wake of the U.S. Supreme Court's recent Wayfair decision authorizing states to collect taxes owed on online sales, Utah lawmakers held a one-day special session that included (among other tax topics) legislation to ensure the state will be ready to collect those taxes, and a Nebraska lawmaker began pushing for a special session for the same reason. Voters in Colorado and Montana got more clarity on tax-related items they'll see on the ballot in November. And Massachusetts moves closer toward becoming the final state to enact a budget for the new fiscal year that started July 1 in most states.

Dylan GrundmanSenior Policy Analyst

July 12, 2018

State sales tax holidays, our newly updated policy brief shows, are the equivalent of the bad kind of holiday vacation: tax policy that sounds nice at first but ultimately cuts corners, wastes money, precludes better options, and leaves states worse off than they would be without them. Unfortunately, while several states have wised up about sales tax holidays in recent years, 18 states will fall for the superficial attraction of these tax policy gimmicks in 2018.

Aidan DavisSenior Policy Analyst

July 10, 2018

Despite some challenging tax policy debates, a number of which hinged on states’ responses to federal conformity, 2018 brought some positive developments for workers and their families. This post updates a mid-session trends piece on this very subject. Here’s what we have been following:

Meg WieheDeputy Director

July 10, 2018

New Jersey avoided a second consecutive shutdown and proved that even against staunch opposition, progressive solutions to states' fiscal issues are attainable, and Arizona voters will likely have a chance to solve their education funding crisis in a similar way. Budget and tax debates remain to be resolved, however, in Maine and Massachusetts. Meanwhile, voters are gaining a clearer picture of what questions they will be asked on ballots this fall as signature drives conclude in several states.

Dylan GrundmanSenior Policy Analyst

July 3, 2018

With many state fiscal years beginning July 1, most states that will make decisions this year about federal tax conformity have now done so, so it is now time for an update on how well state policymakers have kept to, or veered from, the path we charted out earlier this year. Most states that have enacted laws in response to the federal changes have adhered to some but not all of the principles we laid out, with a few responding rather prudently and a handful charting a much more treacherous course of unfair, unsustainable policy based on unfounded promises of economic growth.

Meg WieheDeputy Director

June 28, 2018

This week, lawmakers in Louisiana, Pennsylvania, Rhode Island, Vermont, and the District of Columbia wrapped up their budgets in time for the new fiscal year that starts July first in most states, with some of these resolutions coming after contentious debates and repeated special sessions. New Jersey's debate is not yet finished as leaders clash over spending priorities and the taxes on millionaires and corporations needed to fund them. Meanwhile, signature drives to put tax-related questions on fall ballots are heating up in several other states. And our "What We're Reading" section includes helpful resources on implications of the Supreme Court's Wayfair online sales tax decision last week.

Carl DavisResearch Director

June 26, 2018

A rare sight is coming to Oklahoma. The last time the Sooner State raised its gas tax rate, the Berlin Wall was still standing, and Congress was debating whether to ban smoking on flights shorter than two hours. Fast forward 31 years, and Oklahoma is finally at it again. On Sunday, the state’s gas tax rate will rise by 3 cents and its diesel tax rate by 6 cents. Both taxes will now stand at 19 cents per gallon—still among the lowest in the country. But Oklahoma isn’t the only state where gas taxes will soon rise.

Dylan GrundmanSenior Policy Analyst

June 22, 2018

South Carolina legislators will return next week to try to finalize a few issues before the end of their session and fiscal year on June 30th, including the question of how to respond to the federal Tax Cuts and Jobs Act (TCJA). That's a short timeframe with some important questions at stake, and some misinformation has been spread, so here's a quick guide to the facts, issues, and options.

Meg WieheDeputy Director

June 21, 2018

The U.S. Supreme Court made big news this morning by allowing states to collect taxes due on internet purchases, which will help put main-street and online retailers on an even playing field while also improving state and local revenues and the long-term viability of the sales tax as a revenue source. Many states remain focused on more local issues, however, as Louisiana's third special session of the year kicked off, Massachusetts won a living wage battle while losing an opportunity to put a popular millionaires tax proposal before voters, and major fiscal debates continue in Maine, New Jersey, and Vermont.

Meg WieheDeputy Director

June 13, 2018

With many state fiscal years ending June 30th, budget negotiations were completed recently in California, Illinois, Michigan, and North Carolina. New Jersey remains a state to watch as a government shutdown looms but leaders continue to disagree about a proposed millionaires tax, corporate taxes, and school funding. In other states looking to wealthy individuals and large corporations for needed revenues, Arizona's teacher pay crisis could be solved with a tax on its highest-income residents and a similar proposal in Massachusetts is polling well, but Seattle's new "head tax" could be on the chopping block.

Meg WieheDeputy Director

June 1, 2018

This week, Virginia lawmakers overcame their budget impasse and approved an expansion of Medicaid, North Carolina's behind closed doors budget debate appears to be wrapping up, and Vermont's special session continues in the wake of the governor's vetoes of the state budget and accompanying tax bills. New research highlighted in our What We're Reading section shows that both corporate income tax cuts and business tax subsidies contribute to wider economic inequality. And the possible reconstitution of a federal commission on intergovernmental relations could not come soon enough, as other headlines this week include a state-to-local shift in school funding, governments turning to the gig economy for staffing and revenue needs, and state-federal tensions heating up as the IRS cracks down on gimmicks designed to evade the $10,000 cap on the federal deduction for state and local taxes.

Carl DavisResearch Director

May 24, 2018

A new ITEP report explains the close parallels between the new workaround credits and existing state tax credits, including those benefiting private schools. The report comes the same day that the IRS and Treasury Department announced they would seek new regulations related to these tax credits. It notes that the SALT workarounds are emblematic of a broader weakness with the federal charitable deduction. And it cautions regulators to avoid a “narrow fix” that will only address the newest SALT workarounds (which, so far, have only been enacted in blue states) without also addressing other abuses of the deduction, which have long been employed by red states.

Meg WieheDeputy Director

May 23, 2018

This week the governors of Louisiana and Minnesota both vetoed budget bills, leading to another special session in Louisiana and unanswered questions in Minnesota, and Missouri legislators managed to push through a tax shift bill just before adjourning their regular session and heading right into a special session to impeach their governor. Wisconsin and Wyoming localities are both looking at ways to raise revenues as state funding drops. And our What We're Reading section contains helpful pieces on changing demographics, the effects of wealth inequality on families with children, and the impacts of the Supreme Court sports gambling and online sales tax cases.

Carl DavisResearch Director

May 22, 2018

State tax policy can be a contentious topic, but in recent years there has been a remarkable level of agreement on one tax in particular: the gasoline tax. Increasingly, state lawmakers are deciding that outdated gas taxes need to be raised and reformed to fund infrastructure projects that are vital to their economies.

Meg WieheDeputy Director

May 17, 2018

This week the U.S. Supreme Court opened the door to legal sports gambling in the states (see our What We're Reading section), which will surely be a hot topic in state legislative chambers, but most states currently have more pressing matters before them. The teacher pay crisis made news in North Carolina, Alabama, and nationally. Louisiana, Oregon, and Vermont lawmakers are headed for special sessions over tax and budget issues. And several other states have recently reached or are very near the end of their legislative sessions.

Aidan DavisSenior Policy Analyst

May 15, 2018

Once again, public school teachers are taking a stand for education and against irresponsible, top-heavy tax cuts that deprive states of the revenue they need to sufficiently fund public services, including education.

Meg WieheDeputy Director

May 9, 2018

This week we have news of a destructive tax cut plan finally approved in Iowa just as one was narrowly avoided in Kansas. Tax debates in Minnesota and Missouri will go down to the wire. And residents of Arizona and Colorado are considering progressive revenue solutions to their states' education funding crises.

Carl DavisResearch Director

May 9, 2018

Last year’s federal tax cut bill changed 529 college savings accounts in a major way, expanding them so that they can be used as tax shelters by higher-income families who choose to send their children to private K-12 schools. This controversial change was added in the Senate by the slimmest of margins—requiring a tie-breaking vote […]

Misha HillPolicy Analyst

May 4, 2018

Immigrants face tremendous uncertainty and little hope under the Trump Administration. The administration’s actions—banning travel from residents of primarily Muslim countries, the deportation of Christian Iraqi asylum seekers, and the rescission of DACA, the program that provides temporary reprieve to young immigrants; public statements on the value of immigrants from countries like Norway; and leaked […]

Carl DavisResearch Director

May 3, 2018

While President Trump was busy publicly shaming Amazon for failing to collect some state and local sales taxes, his own business’s online store was not only failing to collect the same taxes, but was arguably more aggressive than Amazon in refusing to do so. As of last month, TrumpStore.com was not even collecting sales tax in New York State despite having a “flagship retail store” inside Trump Tower, in Manhattan. As ITEP pointed out at that time: “It seems likely that the presence of a New York location should be enough to put TrumpStore.com within reach of New York’s sales tax collection laws.”

Meg WieheDeputy Director

May 3, 2018

This week, Arizona teachers continued to strike over pay issues and advocates unveiled a progressive revenue solution they hope to put before voters, while a progressive income tax also gained support as part of a resolution to Illinois's budget troubles. Iowa and Missouri legislators continued to try to push through unsustainable tax cuts before their sessions end. And Minnesota and South Carolina focused on responding to the federal tax-cut bill.

Aidan DavisSenior Policy Analyst

May 1, 2018

Today marks Day 4 of the Arizona teachers’ walkout. After decades of tax cuts and underfunding of public education, education advocates are now driving the debate and urging lawmakers to act. Their newest proposal would raise taxes on incomes above half a million dollars for married couples, or above $250,000 for single taxpayers—that is, the same wealthy taxpayers that just received a generous tax cuts under last year’s federal tax overhaul.

May 1, 2018

One of the most repeated myths in state tax policy is called “millionaire tax flight,” where millionaires are allegedly fleeing states with high income tax rates for states with lower rates. This myth has been used as an argument in state tax debates for years but Cristobal Young argues in his book, “The Myth of the Millionaire Tax Flight,” that both Democrats and Republicans are “searching for a crisis that does not really exist,” and that there is no evidence to support this myth.

Meg WieheDeputy Director

April 27, 2018

This Arbor Day week, the seeds of discontent with underfunded school systems and underpaid teachers continued to spread, with walkouts occurring in both Arizona and Colorado. And recognizing the need to see the forest as well as the trees, the Arizona teachers have presented revenue solutions to get to the true root of the problem. In the plains states, tax cut proposals continue to pop up like weeds in Kansas and threaten to spread to Iowa and Missouri, where lawmakers are running out of time but are still hoping their efforts to pass destructive tax cuts will bear fruit.

Meg WieheDeputy Director

April 20, 2018

This week the IRS website asked some would-be tax filers to return after December 31, 9999. State legislators don't have quite that much time, but are struggling to wrap up their tax debates on schedule as well. Iowa legislators, for example, are ironically still debating tax cuts despite having run out of money to cover their daily expenses for the year. Nebraska's session wrapped up, but its tax debate continues in the form of a call for a special session and the threat of an unfunded tax cut going before voters in November. Mississippi's tax debate has been revived by emergency bridge closings. Kentucky's session went down to the wire as lawmakers overrode vetoes to push through a tax increase to help fund teacher salaries that raises taxes on most taxpayers while cutting them for the richest 5 percent tax. And lawmakers in Arizona and Colorado may need to stay after school to resolve teacher pay issues.